Correlation Between ATMA Participaes and Telefonaktiebolaget
Can any of the company-specific risk be diversified away by investing in both ATMA Participaes and Telefonaktiebolaget at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining ATMA Participaes and Telefonaktiebolaget into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ATMA Participaes SA and Telefonaktiebolaget LM Ericsson, you can compare the effects of market volatilities on ATMA Participaes and Telefonaktiebolaget and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in ATMA Participaes with a short position of Telefonaktiebolaget. Check out your portfolio center. Please also check ongoing floating volatility patterns of ATMA Participaes and Telefonaktiebolaget.
Diversification Opportunities for ATMA Participaes and Telefonaktiebolaget
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ATMA and Telefonaktiebolaget is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding ATMA Participaes SA and Telefonaktiebolaget LM Ericsso in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telefonaktiebolaget and ATMA Participaes is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on ATMA Participaes SA are associated (or correlated) with Telefonaktiebolaget. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telefonaktiebolaget has no effect on the direction of ATMA Participaes i.e., ATMA Participaes and Telefonaktiebolaget go up and down completely randomly.
Pair Corralation between ATMA Participaes and Telefonaktiebolaget
Assuming the 90 days trading horizon ATMA Participaes SA is expected to under-perform the Telefonaktiebolaget. In addition to that, ATMA Participaes is 1.35 times more volatile than Telefonaktiebolaget LM Ericsson. It trades about -0.13 of its total potential returns per unit of risk. Telefonaktiebolaget LM Ericsson is currently generating about -0.16 per unit of volatility. If you would invest 2,440 in Telefonaktiebolaget LM Ericsson on August 27, 2024 and sell it today you would lose (124.00) from holding Telefonaktiebolaget LM Ericsson or give up 5.08% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ATMA Participaes SA vs. Telefonaktiebolaget LM Ericsso
Performance |
| Timeline |
| ATMA Participaes |
| Telefonaktiebolaget |
ATMA Participaes and Telefonaktiebolaget Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ATMA Participaes and Telefonaktiebolaget
The main advantage of trading using opposite ATMA Participaes and Telefonaktiebolaget positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ATMA Participaes position performs unexpectedly, Telefonaktiebolaget can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Telefonaktiebolaget will offset losses from the drop in Telefonaktiebolaget's long position.| ATMA Participaes vs. Mliuz SA | ATMA Participaes vs. Lojas Quero Quero SA | ATMA Participaes vs. Grupo SBF SA | ATMA Participaes vs. Enjoei SA |
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Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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